Breakaway MLM Plan

Breakaway compensation plans are the oldest of the three common plan types. They’ve been around since the 1970s. To this day, they’re the most popular compensation plan among party plan companies. A breakaway compensation plan uses two primary bonuses and two defined sales force classifications: sales people and sales leaders (also known as breakaway distributors). Each type is compensated differently. Sales people are paid a commission on group volume. Sales leaders continue to get that group volume commission but they also get a generation commission.

Salespeople get paid a commission on their group volume. This is typically either a level commission or a stairstep differential commission. A level commission pays distributors a percentage on a certain number of levels of their downline. A stairstep commission is a type of differential commission that is comprised of progressive steps which have specific requirements; as distributors meet the requirements to climb the steps, they earn increasing percentages on their personal and group volume.

The division between groups is marked by the positions of breakaways in the tree. Let’s say we have a distributor named Karen in the tree. Her group is defined as everyone beneath her who hasn’t reached the breakaway rank. When someone beneath her reaches a breakaway rank, that person literally breaks off into their own group. All the volume generated beneath the breakaway is now in that breakaway’s group.

Advantages of Breakaway Plan

1. One of the real advantages of this plan is that because you have two commission types specifically set aside—one for paying salespeople and one for paying sales management—it’s much easier to set the percentages and qualifications to achieve the desired results. Consequently, professional distributors of both kinds can be better taken care of with this plan.

2. The plan does a great job of paying salespeople. Of all the standard compensation plans, this one has the strongest potential in this area. Reaching the breakaway rank allows Karen to make a lot more money on her customers and brand-new distributors—those who need her help. Consequently, she has a lot more incentive to work with them. On the people who have advanced to breakaway/sales leader, she’s now earning a smaller percentage. However, since she gets paid down numerous levels of sales leaders—successful people—this means she gets paid on a lot of group volume.

3. The plan uses level commissions for paying sales leaders. That is the most successful method for paying sales management commissions.

4. The fact that this plan has defined a certain commission type to pay salespeople and another commission type to pay sales management simplifies the design and creation of qualifications.